How Sears could af­fect hol­i­day sales

Shop­pers may see big dis­counts if re­tailer ex­its.

USA TODAY US Edition - - MONEY - Charisse Jones

Just a few months af­ter Toys R Us shut its doors, an­other iconic re­tailer may be ab­sent from the re­tail land­scape this hol­i­day sea­son as Sears re­port­edly hov­ers on the brink of bank­ruptcy.

If the 125-year-old com­pany files for court pro­tec­tion, it could aim to re­struc­ture as op­posed to clos­ing up shop. But if it did de­cide to wind down op­er­a­tions, go­ing-out-of-busi­ness sales could mean deep dis­counts for shop­pers tick­ing off their hol­i­day lists.

And the dwin­dling rel­e­vance that helped put Sears and its sis­ter re­tailer Kmart in such dire straits to be­gin with may also mean that, if both dis­ap­pear, many shop­pers will hardly no­tice.

“While any store clo­sure is bad news for Sears cus­tomers, given the un­pop­u­lar­ity of the re­tailer and the ubiq­ui­tous na­ture of what it sells, cus­tomers will be able to eas­ily find al­ter­na­tive places to shop,” says Neil Saun­ders, man­ag­ing direc­tor of re­tail con­sul­tancy Global Data. “While peo­ple will re­gret the fail­ure of a once iconic brand, I don’t sup­pose many peo­ple will mourn the loss of Sears in its present form.”

Sears Hold­ings, the par­ent com­pany of Sears and Kmart, has been strug­gling to sur­vive, hob­bled by the rise of Ama­zon and more tra­di­tional ri­vals who’ve wooed away cus­tomers with sim­i­lar merchandise of­fered for a lower price or with a bet­ter shop­ping ex­pe­ri­ence. But time may have fi­nally run out as the com­pany con­fronts a $134 mil­lion debt pay­ment due Mon­day and stalled ef­forts to re­struc­ture its debts and sell off more as­sets. The com­pany is po­ten­tially pre­par­ing to file for bank­ruptcy pro­tec­tion as soon as this week, ac­cord­ing to the Wall Street Jour­nal and CNBC.

If Sears goes the way of Toys R US, which hoped to re­struc­ture af­ter fil­ing for bank­ruptcy pro­tec­tion but ul­ti­mately wound up liq­ui­dat­ing, there could be a rip­ple ef­fect among re­tail­ers that leads to good deals for gift buy­ers.

“If the com­pany de­cided to shut stores and liq­ui­date stock, it could force some other re­tail­ers to sim­i­larly dis­count prod­uct,” Saun­ders says.

Even if Sears de­cided to stay in busi­ness, it might mo­men­tar­ily get more at­ten­tion from shop­pers who as­sume that its ur­gent need to re­or­ga­nize would force it to of­fer bet­ter bar­gains. Though, ini­tially, they might be wrong.

“The re­al­ity is that for the first two to three weeks, the deals aren’t all that great,” says Paula Rosen­blum, man­ag­ing part­ner at RSR Re­search. “A savvy shop­per can fig­ure that out quickly, but the al­lure of the liq­ui­da­tion is hard to avoid. In that sce­nario, shop­pers will flock to the Sears stores and take their chances, and other re­tail­ers will suf­fer.”

Yet shop­pers may shy away from buy­ing more ex­pen­sive items, such as elec­tron­ics or gar­den equip­ment, from a re­tailer that may not be around to re­place them. “No one wants to buy durable goods from a com­pany they don’t think is durable,” she says.

And the in­creased com­pe­ti­tion Sears has faced in cat­e­gories it once dom­i­nated may di­min­ish the im­pact a Sears bank­ruptcy could have on pric­ing by the rest of the in­dus­try.

“When you look at Sears ... what cat­e­gory will they dra­mat­i­cally take the prices down in?” says Greg Portell, lead part­ner for strat­egy and man­age­ment con­sult­ing firm A.T. Kear­ney, not­ing that its ri­vals range from Home De­pot to Kohl’s. “We have to in­fer the im­pact of bank­ruptcy would be scat­tered.”

If Sears ul­ti­mately doesn’t sur­vive, its ri­vals stand to ben­e­fit in the long run from hav­ing one less ri­val to com­pete with.

SEARS

If Sears goes the way of Toys R Us, there could be a rip­ple ef­fect among re­tail­ers that leads to good deals for gift buy­ers.

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